Santos Limited (ASX: STO) saw its stock price plummet by 9.13% in Friday's trading session, as the Australian energy sector faced a significant sell-off amid a perfect storm of negative factors. The sharp decline comes as global oil prices crashed and investors grappled with concerns over increased OPEC+ output and potential trade war impacts.
The catalyst for this dramatic drop in Santos' share price can be attributed to several key factors: 1. Oil Price Crash: Global oil prices experienced their steepest fall in three years, with WTI crude oil prices plunging 6.9% to US$66.78 a barrel and Brent crude oil prices falling 6.6% to US$70.00 a barrel. This substantial drop in oil prices has sent shockwaves through the energy sector, directly impacting major oil and gas companies like Santos. 2. OPEC+ Output Increase: News emerged that OPEC+ countries have agreed to accelerate their planned oil output increases. This unexpected move has raised concerns about potential oversupply in the global oil market, further pressuring oil prices and energy stocks. 3. Trade War Fears: The announcement of new U.S. tariffs by President Donald Trump has sparked fears of an escalating global trade war. This development has rattled markets worldwide, with investors concerned about its potential impact on global economic growth and oil demand.
The Australian energy sub-index bore the brunt of these fears, plummeting 7.6% to its lowest level since November 2020. Santos was not alone in its decline, as other energy majors like Woodside Energy also experienced significant losses. The broader ASX200 benchmark index also felt the impact, shedding 2.3% to reach a nearly eight-month low.
As global oil prices continue their decline in early Asian trade, the outlook for energy stocks remains uncertain. Analysts suggest that these stocks may continue to face pressure as long as markets price in higher probabilities of a U.S. recession and global economic slowdown. Investors are now closely watching for any signs of moderation in trade tensions or potential responses from central banks to stabilize markets.
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